Keeping in the Dark with Hard Evidence

• Authors: Daniel Bird and Alexander Frug.
• BSE Working Paper: 1534 | November 25
• Keywords: manipulation , selective forced disclosure , long-run beliefs
• JEL codes: D83

We present a dynamic learning setting in which the periodic data observed by the decision-maker is mediated by an agent. We study when, and to what extent, this mediation can distort the decision-maker’s long-run learning, even though the agent’s reports are restricted to consist of verifiable hard evidence and must adhere to certain standards. We introduce the manipulation-proof law of large numbers – that delivers a sharp dichotomy: when it holds, the decision-maker’s learning is guaranteed in the long-run; when it fails, the scope for manipulation is essentially unrestricted.